Whatever
Check out what gold has done since 9/11. Oil had done similar
Posted on 11/02/2007 5:23:12 AM PDT by Thorin
I hate how the ‘mega’ rich and the newfound ‘super duper uber’ rich skew median data. I sure wish there was some statistic that could control for the ‘extra double whammy just plain ridiculous ‘ rich getting richer. LOL!
I was in a restaurant once when Bill Gates walked in for dinner. Instantly, the average net worth of the patrons rose to a billion dollars. I felt rich enough to order that second bottle of wine.
Let's think of this a different way . . .
In my example, a European investor who was looking to earn $400 in U.S. dollars was willing to pay $10,000 (in its Euro equivalent) five years ago to get that return. Today, he's only willing to pay $6,500 to get that same return. His "coupon" is still the same in both cases (4%), but the price (in his own currency) that he's willing to pay for that coupon is 35% lower today than it was five years ago.
As far as currency fluctuations, if I knew that, I'd be worth $1 billion, at least.
Not necessarily. And I think you're smarter than that.
If the U.S. government were a publicly-traded corporation, any smart investor would look at its balance sheet and determine that there are some serious bumps in the road ahead. THAT is why the dollar has been in such a steep decline. An investor can demand a higher dividend, pay a lower price for the company stock, or both. Right now Uncle Sam is paying a fixed "dividend" . . . so prospective investors have simply bid down the price of the "stock."
I bet he really wacked out the median net worth too! LOL
You’ll see.
Yes, he lost $3500 since he bought the bond. He's still earning 4%. If he wanted to earn more, he should sell now.
Right now Uncle Sam is paying a fixed "dividend"
New bonds go on sale all the time. And the coupon is still low. For now.
You are aware of what's been happening to the housing market since 2004, right? The housing market will have a huge impact on household net worth figures.
One large number skews the median, eh?
Yep, that’s the Havoc that I remember. When he wasn’t hating Catholics he was butchering all manner of logic and arithmetic. The science is weak in that one.
Whatever
Check out what gold has done since 9/11. Oil had done similar
The heartbreak of psoriasis.
Indications are that China will start buying US assets with the trillion plus US dollars they have in reserve
ChiComs have bought into Blackstone and I thinks other investment firms that can grease the the skids for USG approval of these asset purchases
IOW China might outright dump some US securities they hold but as of now I think they may go on buying binge instead
Perhaps. But I suspect that several trillion dollars in unfunded entitlement liabilities (exacerbated by that stupid Medicare prescription drug plan) has had more to do with it.
I'm well aware of what's gone on in the housing market. I'm also aware that even with the big increase in homeowner equity, it still only accounts for about 20% of our entire net worth. We own a lot of assets other than our homes.
I'd recommend taking a look at the most recent Federal Reserve Flow of Funds report. I'd link you to it but for some reason I can no longer open pdf's. Help desk time.
Right. He's willing to accept a low coupon because he's paying a discounted rate on a new bond. His old bond isn't the same as the new bond (in his mind) even if the coupon is the same . . . because he paid $10,000 for the old one but only $6,500 for the new one.
My best post from four years ago foretold what’s happening today
Squanderville versus Thriftville (Warren Buffet)
http://www.freerepublic.com/focus/f-news/1053684/posts
It's only a discount if the dollar goes back up. Otherwise he's paying 6500 Euros for a $10,000 bond that pays a 4% coupon. When he converts back to Euros (at today's rate) he'll still get 6500 Euros and his 4% interest.
because he paid $10,000 for the old one but only $6,500 for the new one.
Averaging down doesn't change the coupon. 4% for the old one, 4% for the new one.
In the meantime, he's getting a 35% "discount" on his European taxes, too -- since the 4% he's earning is being reported on his tax return in Euros, not dollars (even if he never exchanges these dollars into Euros this year).
It gets really complex, but when you do business across borders these are the things that come into play when you make decisions.
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